A Study by the high-street bank HSBC has compiled a league table of the UK’s buy-to-let hotspots. The list is dominated by coastal towns and northern cities. Inexpensive property prices coupled with strong rental demand has made seaside towns, such as Blackpool, and cities such as Manchester, Hull and Nottingham lucrative prospects for buy-to-let landlords.

Despite the popularity of northern and midland areas, Southampton tops the buy-to-let list with a rental yield of 7.82% per year. Rental accommodation apparently makes up one quarter of the south coast city’s housing. The average property costs £138,311, around £20,000 less than the national average, but the average monthly rental stands at £901.

Blackpool comes a close second in the list with an average house price of £75,943, monthly rent of £494, making a rental yield of 7.81%. Holiday rentals and seasonal work is the reason cited for coastal areas coming out on top.

The top ten rental yields in the UK (as compiled by HSBC)

One area that is conspicuous by its absence in the top ten is London. This is because, even though rentals in the capital seem to hit a new high every month (in February the average London rent stood at £1,092), the sheer cost of property is keeping the rental yield at a more modest level than in other areas. Southwark tops the list of London boroughs with a rental yield of 6.15%.

Areas in outer London seem to offer some of the capital’s best buy-to-let prospect, such as Newham, Enfield, Brent and Kingston upon Thames.

Commenting on the report, head of mortgages at HSBC, Peter Dockar, said: “Buy-to-let remains a good investment for those looking for above average returns. Twenty-three of the top 50 areas offer yields above five per cent – significantly more than is available from more traditional savings options. However, it is clear there is a fine line between a property in a desirable area, the rents that can be achieved, and the returns that can be yielded. So it is key landlords do their research, as often the most popular locations may not offer the best return.